New Laws Help Improve Member's Prescription Purchasing Experience

On October 10, 2018, with bi-partisan support, President Trump signed two bills into law, “The Patient Right to Know Drug Prices Act” and “The Know the Lowest Price Act.” Both laws prohibit the use of “pharmacy gag clauses.” Please read on for more details in this article by Rachel Machera and Steve Mann of Fidelity Benefits Consulting.

_________________________________________________________________________

These “pharmacy gag clauses” have been used by pharmacy benefit managers (PBMs), the entities that commonly administer the prescription drug coverage under a health plan, to prevent pharmacists from telling consumers whether their prescription would cost less if they paid out-of-pocket rather than using their health plan coverage. 

THE TWO LAWS

“The Know the Lowest Prices Act”

Applies to Medicare Prescription Drug Plan (PDP) sponsors and Medicare Advantage organizations effective for plan years beginning on or after January 1, 2020.

“The Patient Right to Know Drug Prices Act”

Applies to employer sponsored group health plans and health insurers offering group or individual plans.

While these laws are good news for consumers, participants in many employer sponsored plans may not be impacted by this change. A well-negotiated prescription drug contract would have already restricted the practice of imposing gag clauses on pharmacists.

Many employer PBM contracts require that member cost sharing be defined as the lesser of three: 

• the copay, or
• the negotiated price, or
• the usual and customary price (the price charged to someone without insurance)

The amount billed to the plan is typically defined as the lower of the pharmacy’s usual and customary price or the negotiated price.  

Even with the new laws to ensure that all members benefit from these savings opportunities, it is prudent to consider three best practices to verify that your PBM partnership is working best for you. 

THREE AREAS OF CONSIDERATION: 

1. Contract Review - Have your contracts been reviewed for areas of improvement? PBM contracts have become increasingly complex, and an expert review can often find many areas of improvement to ensure your and your participants’ financial outcomes are maximized.
2. Independent Verification - Hiring a qualified entity to review and compare the administration of your plan to the contract terms will often uncover process improvements and financial recoveries to your plan.
3. Market Assessment - Annual market checks to evaluate the competitiveness of your PBM contract will almost always net improvements given the current dynamics of the deals and competitiveness across PBMs.

We will keep you abreast of updates on this important topic as more information becomes available.

__________________________

Fidelity does not provide legal or tax advice, and the information provided is general in nature and should not be considered legal or tax advice. Consult an attorney, tax professional, or other advisor regarding your specific legal or tax situation.

Views expressed are as of the date indicated and may change based on market and other conditions. Unless otherwise noted, the opinions provided are those of the author, and not necessarily those of Fidelity Investments.

Links to third-party web sites may be shared on this page. Those sites are unaffiliated with Fidelity. Fidelity has not been involved in the preparation of the content supplied at the unaffiliated site and does not guarantee or assume any responsibility for its content.

Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917.

865512.1.0